The founders and former controlling shareholders of Tekkie Town have lost their second Steinhoff-related battle in the Supreme Court of Appeal (SCA), with last week’s unanimous ruling that overturned an earlier high court order preventing both Pepkor and Steinhoff from dealing in the Tekkie Town shares that are owned by Pepkor.
On Friday a spokesman for Steinhoff told Moneyweb: “We have read through this strong and unanimous judgment and are very happy that our appeals were upheld.” The judgment removes a restriction on Steinhoff’s ability to reorganise assets within the troubled group. It also removes a distraction facing the Pepkor management.
Read: The Tekkie Town tug-of-war continues (Apr 2019)
But it appears the Tekkie Town founders are not giving up on their war with Steinhoff.
‘Not letting up’
Former Tekkie Town CEO and co-founder Bernard Mostert told Moneyweb on Saturday: “We are not letting up and not letting go. We will get our final award from both Steinhoff and Pepkor.”
He added that the value of that award would be significantly more than the R116 million that has been offered in terms of Steinhoff’s settlement proposal, which was announced in August. The proposed award is a fraction of the R1.85 billion the Tekkie Town founders are claiming from Steinhoff and, points out Mostert, is less than the remuneration Steinhoff CEO Louis du Preez has drawn over the past three years.
In 2016 founders Mostert and Braam van Huyssteen sold their 59% stake in the highly successful shoe retail business to Steinhoff for shares valued, at the time, at R3.3 billion. In December 2017, news of widespread fraud and the resignation of former CEO Markus Jooste, saw the Steinhoff share price plunge to below R1 from around R80 at the time of the deal.
The latest ruling follows the SCA’s decision in July to reject the Tekkie Town founders’ application to appeal an interim restraint of trade, preventing them from trading certain footwear in their newly established Mr Tekkie chain.
Last week’s ruling by the SCA included damning criticisms of the lower court’s decision, describing aspects of it as “unfair” and “regrettable”.
The order handed down by the high court in April 2019 was based on a draft order submitted by the Tekkie Town founders’ legal team the previous day. The order, which the SCA said “was materially different from the order [initially] sought” by the Tekkie Town founders, was handed down without giving Steinhoff an opportunity to make submissions on it.
Aggravating the matter from Steinhoff’s perspective was the delay in giving the reasons for the order.
“These reasons had not been given by May 10, 2019 when the appellants had filed their applications for leave to appeal,” said the SCA’s Judge Schippers. “Fairness requires that the parties – especially the losing party – should be left in no doubt as to the reasons for an order and consequently why they have won or lost.”
The SCA said the Tekkie Town founders had wrongly argued that Steinhoff controlled the legally-separate Pepkor.
Pepkor, which is 71% held by Steinhoff, has incorporated the Tekkie Town business into its Specialty division. The SCA noted that Pepkor was not a party to the founders’ legal action. It also stated that the Tekkie Town founders had alleged fraud by Steinhoff but had provided no evidence.
Mostert told Moneyweb the fact that no arrests have yet been made creates the risk of the Steinhoff saga “being diluted” to just a chapter of history.
“Steinhoff and its leadership seemingly have all the evidence in hand to assist all the authorities to enable prosecution but refuse to do so.”